Market declines on fears of more Fed hikes

By Jenniffer B. Austria

LOCAL shares edged lower Thursday as investors focused on the minutes of the US Federal Reserve’s latest monetary policy meeting.

The 30-company Philippine Stock Exchange index lost 38.13 points, or 0.58 percent, to close at 6,474.26.

China Bank Capital managing director Juan Paolo Colet said investors turned negative after a review of the Fed’s meeting reaffirmed its hawkish stance on US monetary policy.

“Sentiment was also weighed by China’s export curbs on certain metal

PSEi July 6, 2023

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used in electronics and semiconductors in what is seen as an escalation of its technology trade war with the US and Europe,” Colet said.

Colet said investors were looking for new catalysts to drive stock prices, as the deceleration of domestic inflation rate was already priced in by traders.

RCBC chief economist Michael Ricafort said the local equities de-

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MONTREAL—Canada has reached an agreement with carmaker Stellantis to immediately resume construction of a battery plant, ministers announced Wednesday, after the project was suspended over a subsidies disagreement.

The plant in Windsor, Ontario, a Can$5 billion (US$3.8 billion) joint venture to supply EV batteries for a significant portion of the North American market, was billed by Ottawa as the largest-ever investment in the country’s auto sector.

But Stellantis suspended the project in May, saying the federal government had not delivered promised subsidies.

On Wednesday, Canadian Deputy Prime Minister Chrystia Freeland announced an agreement had been reached.

“This agreement is good for workers and good for Canada,” Freeland said in a statement shared on Twitter.

Stellantis said in a separate statement that construction of the plant could resume “as of now”, and that battery production was scheduled to begin in 2024.

“This collective effort made the agreement possible, and we are now resuming construction at the Windsor site,” said Mark Stewart, Stellantis’ COO for North America.

Ottawa has made considerable efforts in recent years to attract investment in its electric vehicle sector, touting tax incentives and clean energy subsidies. AFP clined after US stock markets mostly corrected slightly lower overnight. Ricafort said while the market was down in the past two trading days, the decline was considered a healthy downward correction from two-week highs recently. Markets fell again in Asia on Thursday as traders resigned themselves to more US interest rate hikes after minutes from the Federal Reserve’s June meeting showed officials felt more needed to be done to rein in inflation.

The notes added to worries about the global economic outlook after another round of depressed data out of China highlighted the tough work facing authorities as they try to kick start growth after years of zero-Covid-induced sluggishness.

Traders are also awaiting the release of key US jobs data over the next two days as well as watching Treasury Secretary Janet Yellen’s four-day visit to Beijing that aims to stabilize tense relations between the world’s two largest economies.

The Fed minutes showed policymakers were split on the decision to stand pat last month after 10 straight rate increases, surprising some commentators and dealing a blow to hopes the bank was nearing the end of its tightening cycle.

“Some participants indicated that they favored raising the target range for the federal funds rate 25 basis points at this meeting or that they could have supported such a proposal,” they read.

Tesla’s self-driving vehicles ready later this year, says Musk

SHANGHAI, China—Electric car giant Tesla is set to realize fully autonomous vehicles “later this year”, CEO Elon Musk said Thursday, in the billionaire’s latest forecast for the long-anticipated milestone.

“In terms of where Tesla is at this stage, I think we are very close to achieving full self-driving without human supervision,” Musk said via video link at the opening ceremony of an artificial intelligence conference in Shanghai.

“This is only speculation, but I think we’ll achieve full self-driving, maybe what you would call four or five, I think later this year,” the billionaire added, referring to two of the most advanced levels of autonomous driving technology.

The mercurial entrepreneur and Twitter owner admitted that he had been wrong in previous predictions on this timeline, but added: “I feel like we’re closer to it than we ever have been.”

Musk has missed his own deadlines for a fully autonomous vehicle—and Tesla’s driver-assistance technology has provoked regulatory probes in the United States.

China is the world’s biggest electric vehicle market and Tesla announced in April it would build a second massive factory in Shanghai.

His appearance at the World Artificial Intelligence Conference in Shanghai marks his latest effort to maintain close links to China, following a visit to the country in May.

Electric vehicles make up a quarter of car sales in China, the world’s largest car market, and dozens of new models from domestic and Western brands were unveiled in April at the country’s first auto show since Covid restrictions were lifted.

Tesla reported a drop in first-quarter earnings this year, with the company undertaking a series of price cuts in the face of competition from other automakers. AFP

Those backing an increase cited a tight jobs market, stronger-than-expected economic activity and few signs that inflation was on the path to their two percent target.

In the end, however, all 11 voting members on the policy committee supported the pause, though the minutes said “almost all” agreed more tightening will likely be needed this year.

“It was a little surprising given that the decision (to hold rates steady) was sold as unanimous from Fed officials,” said Lindsey Piegza of Stifel Nicolaus & Co.”It’s pretty clear that there was a divergence of opinions, with some officials pretty clearly giving some reluctance for a one-month pause.” With AFP

China rare metals curb won’t affect production—TSMC

TAIPEI, Taiwan—Taiwan’s chip giant TSMC said Thursday it did not expect any direct effect on production from China’s latest export controls on two rare metals essential for making semiconductors.

China’s Ministry of Commerce and Customs announced Monday that exports of gallium and germanium will require a license from August 1 over security concerns, as Beijing and Washington tussle over the global market for chips.

Taiwan Semiconductor Manufacturing Company, whose clients include Apple and Intel, controls more than half the world’s output of the silicon wafers that are used to power everything from drip coffee machines to cars and missiles.

“After evaluation, we do not expect the export restrictions on raw materials gallium and germanium will have any direct impact on TSMC’s production,” the company said in a statement.

TSMC did not elaborate on the longterm indirect impacts but said it would monitor the situation closely.

China is sparring with the United States over a range of issues, including technology, trade and Taiwan.

Home not just to TSMC, self-ruled Taiwan is the world’s primary manufacturing base of semiconductors, a dominance that has become more pronounced given the global demand for microchips and China’s increasingly strained relations with the island.

Beijing claims Taiwan as its own territory and has held two massive military drills around the island in the past year.

Taiwan’s economic minister Wang Mei-hua also downplayed the impact of the new export controls because Chinese-mined germanium and gallium are mainly raw materials that are then refined in countries such as the United States and Japan.”

Taiwan imports the refined materials so the short-term impact is limited,” she told reporters on Tuesday. AFP

Twitter rival Threads reaches 10m users hours after launch

WASHINGTON, USA—More than 10 million people have signed up to Threads, Meta’s rival to Twitter, within the first few hours of its launch, the company’s CEO Mark Zuckerberg said Thursday.

The app went live on Apple and Android app stores in 100 countries at 2300 GMT on Wednesday, and will run with no ads for now, but its release in Europe has been delayed over data privacy concerns.

Threads is the biggest challenger yet to Elon Musk-owned Twitter, which has seen a series of potential competitors emerge but not yet replace one of the world’s biggest social media platforms, despite its struggles.

“10 million sign ups in seven hours,” Zuckerberg wrote on his official Threads account Thursday.

Accounts were already active for celebrities such as Jennifer Lopez, Shakira and Hugh Jackman, as well as media outlets including The Washington Post and The Economist.

Zuckerberg also offered a shot across the bow at Musk—the pair are known to be bitter rivals, and have offered to wrestle it out in a cage fight.

In his first tweet in over a decade, Zuckerberg posted a Spiderman pointing at Spiderman meme in an apparent reference to the similarities between Threads.

On Threads, he wrote: “It’ll take some time, but I think there should be a public conversations app with 1 billion+ people on it. Twitter has had the opportunity to do this but hasn’t nailed it. Hopefully we will.”

Twitter has said it has more than 200 million daily users.

‘Be kind’

Threads was introduced as a clear spin-of of Instagram, which offers a built-in audience of more than two billion users, sparing the new platform the challenge of starting from scratch.

Instagram chief Adam Mosseri told users that Threads was intended to build “an open and friendly platform for conversations.”

“The best thing you can do if you want that too is be kind,” he said.

Zuckerberg is widely understood to be taking advantage of Musk’s chaotic ownership of Twitter to push out the new product, which Meta hopes will become the go-to platform for celebrities, companies and politicians.

“It’s as simple as that: if an Instagram user with a large number of followers such as Kardashian or a Bieber or a Messi begins posting on Threads regularly, a new platform could quickly thrive,” strategic financial analyst Brian Wieser said on Substack.

Analyst Jasmine Engberg from Insider Intelligence said Threads only needs one out of four Instagram monthly users “to make it as big as Twitter.”

“Twitter users are desperate for an alternative, and Musk has given Zuckerberg an opening,” she added.

Under Musk, Twitter has seen content moderation reduced to a minimum with glitches and rash decisions scaring away celebrities and major advertisers.

He has angered Twitter’s most devoted aficionados by declaring that access to its TweetDeck product— which allows users to view a fast flow of tweets at once—would be for paying customers only.

EU ‘many months’ away Meta has its legion of critics too, especially in Europe, which could slow the growth of Threads.

The company has been criticized for its handling of personal data, the essential ingredient for targeted ads that help it rake in billions of dollars in profits.

Mosseri said he regretted that the launch was delayed in the European Union, but had Meta waited for regulatory clarity from Brussels, Threads would have been “many, many, many, months away.”

“I was worried that our window would close, because timing is important,” he told the tech news site Platformer.

According to a source close to the matter, Meta was wary of a new law called the Digital Markets Act (DMA), which sets strict rules for the world’s “gatekeeper” internet companies. AFP